Viet Nam's Pulp & Paper Industry Comes Alive!

Implications: With 84 million people and an ambitious Government anxious to remake Viet Nam from an agrarian economy to an industrial powerhouse, it was only natural that first Lee & Mann and now Tan Mai Paper would build pulp and paper mills as the financing became available.  These two companies will be producing the paper for the boxes and rigid containers for all the manufactured goods to be shipped globally. The implication is that Viet Nam's low labor costs will allow it to take business away from China and to ship its products all over the world.  The country's climate can support huge plantations of Eucalyptus and Acacia that can be harvested in 6-7 years....thus giving the mills some of the lowest wood costs of any country....especially those in the northern hemisphere. There should be no doubt that Viet Nam is going to be an industrial powerhouse!

Analysis: Viet Nam has a population of 84 million....many of them university trained.  The Government has projected a fiber need of 2 million tons by 2010.  This will require the importation of great amounts of OCC, ONP, OMG and SOP as well as virgin market pulp.  To lessen their dependance on imported fiber the Government in encouraging the building of domestic pulp and paper mills.  The two now under construction, Lee & Mann and Tan Mai are just the first two of many which will be built in the next 5-10 years...providing financing becomes available.  The country's low labor cost will induce China to outsource a number of labor-intensive manufactured items to Viet Nam.  Having already a number of excellent deep-water ports means that exporting will be relatively easy.
The new Tan & Mai mills will cost US$199 million and have an annual capacity to produce 130,000 mt of pulp and 200,000 mt of paper.  The 70,000 difference will be made up by recycled fiber such as SOP, OCC and ONP.  The increased demand for these recovered papers on top of China and India's already huge demand will further tighten those markets resulting in increased prices.